| PERTH, March 1
PERTH, March 1 Australia's thermal coal prices,
a benchmark for Asia, slipped to $132 a tonne versus last week
in a thinly traded market which is largely awaiting the results
of annual contract negotiations between Australian producers and
Thermal coal on the globalCOAL Newcastle index for the week
to date closed at $132 a tonne on Monday, down from $136.50 a
week earlier and was up from $131.71 on Friday.
Buyers and sellers are holding out on deals pending
negotiations between Australian thermal coal producers and
Large Japanese utilities Tokyo Electric Power Co (TEPCO),
Tohoku Electric Power Co Inc and Chubu Electric
, negotiate April-to-March fiscal year thermal contracts
with Xstrata , the world's largest exporter of thermal
The contracts are generally around spot price levels, often
with a supply security premium.
This year, two of Xstrata's coal mines have been under force
majeure due to weather considerations, and another was shut due
to a fire.
"They've got plenty of ammunition to go up there with a
strong number," one Sydney-based trade source said.
So far, the bids and offers for the Japanese fiscal year
contract are far apart, with some traders describing the parties
as in a standoff that could take weeks to resolve.
Analyst forecasts for the final settlement price have been
equally far apart, with some predicting as low as $125 per tonne
and the highest forecast coming in at $145 a tonne.
Supplies of thermal coal from New South Wales, where much of
Australia's thermal coal is produced, continue to be marginally
affected by wet weather, but far less so than in Queensland,
which primarily produces coking coal.
But some sources said supply tightness in New South Wales
could be attributed in part to producers setting aside tonnage
to fill new Japanese fiscal year contracts.
"They are tight because they are expecting to sell (a
certain number) of tonnes into Japan starting April 1," another
Sydney-based trader said.
Chinese buyers, recently absent from the coal market due to
lower prices for Chinese domestic coal than internationally
available coal, have signalled renewed interest in Indonesian
So far, Chinese buyers have bid under market levels, trade
sources said, but some suggested that Indonesian producers of
subituminous coal may be willing to lower their prices, with
Indonesia raising its production of subituminous coal this year.
All eyes will be trained on the Japanese fiscal year
contract negotiations, with traders saying most spot trade will
be kept to a minimum until buyers and sellers have a clear
indication on the results of the negotiations.
The market will also continue to watch Chinese demand. The
world's biggest producer and consumer of coal was a key coal
price driver last year.
(Editing by Ramthan Hussain)